Spring into action03 Nov 2023
The current growth of the property market is an early sign that, despite ongoing discussion of interest rates, now may be the time to consider investing in residential property. “We’ve gone through a period where we’ve had no rate changes in the last couple of months,” says Trevor Robertson, BOQ Specialist’s Head of Residential Products. “The early indications are that things have stabilised. That’s why spring could be a good time to consider investing in the property market. However, you need to be very selective in what you look for.”
Residential property has long been an attractive investment option for veterinary professionals, as such investments generally generate good returns, and if not, creates a negative gearing situation which may help with tax deductions, depending on each individual’s circumstances. However, as Trevor points out, expectations of high migration levels over the coming year will continue to put pressure on stock levels and property values. “People need to be careful that they’re not paying top price,” he says. “There still appears to be a disconnect between expectations of property value and the property’s real value.”
“The sheer movement of population after the pandemic, combined with increased immigration, means that there are significantly low vacancy rates everywhere,” adds Julian Muldoon from 1Group Property Advisory. “It also means rents are up anywhere from 10 to 30% over the last 12 to 18 months. That has meant investors have been able to hold their investment properties while rates are rising.”
Do your homework
The fundamental truth about the property market is, despite fluctuations, it has always been very resilient. “Historically, residential property has been a very sound asset,” says Trevor. Julian adds, “The key thing is to get to the coalface and do your research. Be across the market and ready to buy so you’re not scrambling when everyone else piles back in when sentiment rises.”
Doing your research entails having a long-term goal, for which you can draw up an investment strategy. “It’s about working out where that set of numbers, growth target, borrowing capacity, cash flow capacity and objectives fits into the property market,” says Julian. “Every state has different price points, different yields, different major projects to tap into. There are definitely windows of opportunity. I would suggest this year is certainly going to be an opportunity for those that are financially viable and ready.”
Trevor adds that the general principles of picking the right locations still apply. “For example, don’t buy in an area that is flood prone,” he says. “Some councils have fantastic online tools where you can check for this – particularly if you’re looking in a regional or rural area. Make sure the property is not subject to environmentally protected areas. You need to really do your research, and find out the environmental and legal impacts the property may be subject to, so you don’t get caught short.”
Looking to invest in property this spring? Find out more about BOQ Specialist’s limited investor rate offer today by contacting one of their financial specialists on 1300 160 160 or visiting boqspecialist.com.au/invest.
This article may contain general advice. This article has not been prepared with reference to your financial circumstances and should not be relied on as such. You should consider the appropriateness of the advice before acting on it and obtain your own independent financial, tax and legal advice as appropriate. BOQ Specialist is not offering financial, tax or legal advice.